Redflow positioned to monetise flow battery technology

Redflow has developed the world's smallest, most advanced flow battery, which is cost effective, while being a safe energy utilisation and storage solution. With further proliferation of its technology into commercial and residential applications, this would deliver significant commercial benefits.

Redflow Limited (ASX:RFX) has a very unique business strategy which is currently in a transition phase to commercialise its flow battery technology.

Redflow has developed the world's smallest, most advanced flow battery, which is cost effective, while being a safe energy utilisation and storage solution.

The technology has been proven with over 10 years and $50 million of research and development, and is positioned to tap a rapidly growing global energy storage market.

Cost per kWh reduced by over 50% in 2015, with further reductions expected in 2016.

The company recently moved manufacturing to Tier 1 global manufacturer - Flextronics (NASDAQ:FLEX), a supply chain solutions provider operating in more than 100 manufacturing plants in 30 countries.

Flextronics can deliver Redflow volume manufacture, and is capable of high scale production to a world market.

Redflow is now moving to a position where the production ramp-up can begin.

Key applications for Redflow's batteries

The market for Redflow's flow battery continues to expand, as the technology has many universal applications.

Including:

- Telecommunication applications, including mobile phone towers in remote and rural areas without robust electricity grids.- Off grid applications for cost effective energy storage, both in the commercial and residential markets.- Reducing the need and costs of diesel generators in remote areas to improve reliability.- Better control of energy storage and distribution during peak consumption times.- Reduces the impact of peak demand, delaying the need for expensive equipment upgrades.

Key commercial markets

It is estimated there are five million cell towers globally, with a significant number in bad or poor grid environments and/or use diesel generators as back-ups.

As an example, in India, telecom tower sites consumed an estimated 3.2 billion litres of diesel in 2011.

In Africa, more than 50% of towers are off-grid and the remainder rely on unreliable grid power.

Redflow's batteries offer: Reduced diesel consumption; No need for air conditioning; No need for constant site maintenance; Lower operating expenses; Energy can discharge over a longer period of time; and Reduced chance of theft due to unique design.

Successful completion of trials in Africa

Redflow recently successfully completed an end user trial conducted in Africa, supporting the delivery of reliable power in an ‘unreliable energy grid’ environment.

The trial was deployed in conjunction with Specialised Solar Solutions (SSS), a key integration partner working with Redflow in this region.

The end customer has confirmed their intention to move to a full commercial roll out at the trial site, and similar systems are also expected be rolled out at up to a further 7 sites.

The full commercial roll out for this trial site, and the further sites, is expected to require 50 – 150 batteries in total depending on the load requirement at each site.

Other trials are continuing, and expanding, in Asia, Africa, Europe, Central America and Australia.

Continuing small orders for batteries

A commercial order for 12 batteries has been received from SSS for a commercial installation in Africa for a project separate from those mentioned above.

Other smaller commercial product orders also continue to be received by Redflow and are being delivered.

Residential potential

To add further depth to the Redflow product range, the company is developing a residential solutions using its unique flow batteries.

This could potentially open a whole new market and revenue stream, and the key will be demonstrating suitability.

Redflow said that it expects to commence marketing of its entry into the residential energy storage space at the end of March 2016.

Redflow is also building a deployment channel strategy for Australia, with Europe the next likely market.

Analysis

Redflow has positioned itself to monetise its flow battery technology.

With further proliferation of its technology into commercial and residential applications, this would deliver significant commercial benefits.

The company has confirmed the commercial viability of its technology in this space with more than 10 years and $50 million of research and development, in-field testing and demonstration work.

The onboarding rate of small business onto the platform continues to accelerate as banking partners adoption increases.

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